Electrolyte Faces Low-Price Competition Dilemma, Ruitai New Energy Materials to See Net Profit Decline for Two Consecutive Years

Due to intensified industry competition and a significant decline in product prices, Ruitai New Energy Materials (301238.SZ), an electrolyte producer, announced this evening that its net profit for 2024 is expected to decrease by approximately 80%. This also means the company will see a YoY decline in net profit for two consecutive years.

According to the announcement, Ruitai New Energy Materials expects to achieve a net profit attributable to shareholders of the publicly listed firm of 80 million to 110 million yuan in 2024, representing a YoY decrease of 76.42% to 82.85%. After deducting non-recurring gains and losses, net profit is estimated at 76 million to 106 million yuan, a YoY decrease of 76.11% to 82.87%.

Regarding the performance decline, Ruitai New Energy Materials explained that the recent slowdown in the global lithium battery industry's overall growth, coupled with the continuous release of lithium-ion battery material capacity, has intensified industry competition, leading to a significant drop in the prices of the company's primary product, battery materials. Despite the company's efforts to optimize its customer structure, enhance cost reduction and efficiency, and continuously develop new products, processes, and applications, its profitability still experienced a significant decline.

A reporter from CLS noted that another leading electrolyte producer, Tinci Materials (002709.SZ), also recently announced that its 2024 net profit is expected to decrease by over 70% YoY. Similar to Ruitai New Energy Materials, the main reasons for the performance decline are the drop in electrolyte product prices and reduced unit profitability.

Market data shows that electrolyte prices in 2024 were generally on a downward trend, with a particularly large decline in Q3.

However, in December 2024, electrolyte market prices slightly increased, and in January 2025, prices remained stable.

The announcement also revealed that Ruitai New Energy Materials had numerous projects under construction and newly commissioned last year, leading to a significant increase in management expenses and depreciation and amortization costs.

It is understood that the electrolyte industry has undergone large-scale capacity expansion in recent years, and Ruitai New Energy Materials has also invested in multiple projects. According to related announcements at year-end, projects already commissioned include the 70,000 mt/year electrolyte renovation and expansion project by its subsidiary Huarong Chemical, the newly built Prusice 40,000 mt/year lithium-ion power battery electrolyte project by its subsidiary Poland Huarong, and the 80,000 mt/year new materials project by its subsidiary Ningde Huarong.

Due to the surge in industry supply, many companies operated at low operating rates last year. Ruitai New Energy Materials disclosed that as of June 30, 2024, the capacity utilisation rate for its battery materials was 25.47%.

Additionally, under long-term equity investments, the company's associate and key raw material supplier, Tianji Shares (002759.SZ), announced that it expects a loss of 1.25 billion to 1.5 billion yuan for 2024 due to significant goodwill impairment and a substantial decline in the market prices of its leading products. Under the equity method of accounting, the company expects to recognize an investment loss of 75 million to 90 million yuan.